What is a Writ of Attachment?
A writ of attachment is a mechanism that San Diego business owners can use when a lawsuit has been filed to help collect on debts and ensure that monies are available from the debtor when a judgment is obtained. In this respect, a writ of attachment is like other tools such as liens filed with the county, levies conducted by the Sheriff, wage garnishments and more.
A writ of attachment is a legal documentary order obtained from the California Court. Writs are specifically allowed by the California Code of Civil Procedure. See Cal. Civ. Proc. Code, §§481.010 et seq. A writ of attachment can be sought immediately after the case is filed. If granted, the effect of the writ is to “freeze” whatever assets have been allowed by the court. At the end of the case — assuming victory — a writ of execution is issued for the assets to be seized or turned over to the prevailing plaintiff. The attorneys for the creditor/plaintiff must file various pleadings and papers to obtain a writ of attachment and the target/debtor must have notice. A hearing on the writ of attachment is required.
To be eligible for a writ of attachment, the claim must be based on a claim or contract regarding commerce, trade, or a profession. Cal. Civ. Proc. Code, §483.010(c). Further, during the hearing, the creditor/plaintiff must provide sufficient evidence showing the following three elements:
- A valid claim for a fixed or readily ascertainable amount
- The writ of attachment is sought only for the purpose of ensuring recovery on the claim (and not for some other improper purpose) and
- The claim is for money damages (not a claim for specific performance, for example)
Most assets are subject to being “frozen” by a writ of attachment including money in financial accounts, interests in real property, accounts receivable, equipment, inventory, cash on hand, natural resources (timber, oil, natural gas, etc.), farm products, and more. See Cal. Civ. Proc. Code, §587.010.
Writs of Attachment are particularly useful and helpful if there is a concern that the debtor/target of the lawsuit will attempt to avoid a potential judgment by moving, hiding, or depleting assets. Some assets are easy to move and hide such as cash, jewelry, automobiles, and the like. Other assets like inventory and minerals are subject to depletion in a manner that is legal but results in a judgment-proof defendant. Selling inventory in the “normal course of business” is legal, but if no new inventory is purchased, after some time there will be no assets. A writ of attachment avoids these stratagems.
Other advantages include:
- Essentially makes the creditor a “secured creditor”
- Makes the creditor a priority creditor
- Ease of recovery of judgment at the end of the case — assets have already been identified
- Helps spur settlement in favor of the creditor (since, often, assets greater than the potential judgment are frozen)
Call San Diego Corporate Law Today
For more information, call corporate attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard’s law practice is focused on business, transactional, and corporate matters and he proudly provides legal services to business owners in San Diego and the surrounding communities. Call Mr. Leonard at (858) 483-9200 or contact him via email. Like us on Facebook.